Good news if you're selling your home: The home sale exclusion wasn't touched by the massive tax law changes. Arguably one of the biggest tax breaks to be left intact, it allows you to exclude capital gains tax on the first $250,000 in profit from a sale of a home. The maximum home sale exclusion is doubled to $500,000 if you're married and file jointly.
How the exclusion works
The basic requirements are relatively simple. To qualify, you must have owned and used the home as your principal residence at least two of the previous five years. For example, if you live in a home for two years and then move full-time to a vacation home for three years, you can still qualify for the exclusion on the sale of the first home.
Consider these factors if you're determining whether or not you can take advantage of the home sale exclusion:
You may qualify for a partial exclusion if you sell a home before you meet the two year requirement due to an employment change, health issue or some other unforeseen event. In this case, then exclusion is prorated based on your use.
Call us if you have questions about how the home sale exclusion could help you save on your 2018 tax bill.
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